President Trump on Saturday indicated he will make good on a months-old threat to destabilize the health insurance market if Senate Republicans cannot repeal and replace major elements of the Affordable Care Act.
The first part of the ultimatum likely refers to cost-sharing reduction payments made by the federal government to insurers, which in turn offer discounted plans for many low- or middle-income Americans buying plans through ACA marketplaces.
The second portion, while far narrower in scope, is significant in that it highlights an additional tool at the president’s disposal for acting unilaterally on health policy. Though ACA repeal has been in the spotlight throughout 2017, other rumblings regarding subsidies specific to Congress have been rare.
In January, Rep. Ron DeSantis (R-Fl.) introduced a bill that would end an exemption enabling members of Congress and Capitol Hill staff to obtain employer contributions from the government to pay for plans on D.C.’s small-business exchange, which the federal Office of Personnel Management in 2013 issued guidance to allow.
“By blowing the whistle on this special deal concocted by OPM, we will make members of Congress better understand the burdens of ObamaCare, thereby incentivizing members to get to work on a good repeal and replace plan,” DeSantis wrote then in a statement.
Heather Higgins, CEO of the conservative-leaning advocacy group Independent Women’s Voice, wrote last week in a Wall Street Journal op-ed: “Congress is essentially unaffected by the high costs of the ObamaCare exchanges because of a special exemption crafted under the Obama administration.” Some subsidies obtained via D.C.’s small-business exchange, the op-ed claimed, were worth as much as $12,000 annually.
While Trump’s meaning was not entirely clear, it is possible he could direct OPM to rescind the ruling enabling the exemption, as a coalition of right-wing groups encouraged him to do in a July 21 letter.
The president’s threat regarding cost-sharing reduction payments, however, is more broadly impactful, more familiar, and more widely understood.
It also echoes a warning made by Senate Majority Leader Mitch McConnell (R-Ky.) in the early hours of Friday, just after his chamber’s efforts to pass a narrow compromise bill fell one vote short.
“I bet I’m pretty safe in saying, for most of the people on this side of the aisle, that bailing out insurance companies — bailing out insurance companies with no thought of any kind of reform — is not something I want to be part of,” McConnell said in his speech on the Senate floor.
Trump has made the threat before, indicating he believed ending the payments would leave Democrats with no choice but to negotiate with Republicans on a broader repeal bill. But it takes on added significance in light of GOP senators’ setback.
Insurers have repeatedly indicated that ending CSR payments would throw markets into turmoil and even cause the type of “death spiral” Republicans in Congress have long warned against.
The Congressional Budget Office has estimated the payments’ value at $7 billion in 2017, $10 billion in 2018, and $11 billion in 2019.
The Kaiser Family Foundation projects that without CSR payments, the cost of “silver” insurance plans in Medicaid expansion states would increase by 15 percent, and in non-expansion states by 21 percent.
Senate Minority Leader Chuck Schumer (D-N.Y.) responded to Trump quickly via the same medium on Saturday.